I went out on a limb last week, and now it’s time to see how that decision played out.
I predicted that JA Solar Holdings Co., Ltd. (ADR) (NASDAQ:JASO) would post a larger loss than the $1.53 a share that Wall Street was expecting. The maker of solar cells has been consistently surprising analysts with larger deficits, and there was no reason to expect that situation to change. That’s pretty much how things played out. Shares of JA Solar plunged 11% on Monday after checking in with a massive loss of $2.56 a share. I was right.
I predicted that the tech-heavy NASDAQComposite (INDEXNASDAQ:.IXIC) would outperform the Dow Jones Industrial Average (INDEXDJX:.DJI). This has been a tricky call lately, so how did it play out this time? Despite volatility overseas, the stateside markets held up reasonably well. The tech-heavy Nasdaq inched 0.7% lower on the week, while the Dow managed to close just 0.5% higher. I was right.
My final call was for Mattress Firm Holding Corp (NASDAQ:MFRM) to beat Wall Street’s quarterly profit target. The fast-growing retailer of mattresses and bedding accessories has fallen out of favor with investors lately, but the one thing it has done right in its brief tenure as a public company is to surpass what the pros are forecasting on the bottom line. Analysts were looking for a profit of $0.32 a share during the quarter, and it came through with net income of $0.30. I was wrong.
Two out of three? I know that I can do better than that.
Let me once again whip out my trusty, dusty, and occasionally accurate crystal ball to make three calls that may play out over the next few trading days.
1. Research In Motion Ltd (NASDAQ:BBRY) will close lower on the week
Shares of the smartphone pioneer moved lower last week after reports of soft demand for the new Z10 in its stateside debut, but the market was encouraged by a surprising quarterly profit on Thursday.
Hope springs eternal that things will work out better now with the Z10 through Verizon Wireless.
Don’t bet on it, though. Research In Motion Ltd (NASDAQ:BBRY)’s report wasn’t all that encouraging, with the company losing 3 million more subscribers than it had three months earlier, and there’s nothing pretty about a 36% drop in revenue.
The stock ran up too high for a mobile operating system upgrade that was evolutionary, but certainly not revolutionary, in an industry that’s perfectly fine on Android and iOS.
Research In Motion Ltd (NASDAQ:BBRY) isn’t going away. There’s a clean balance sheet here, and BlackBerry has a healthy network business. However, the same speculators who bid up the shares in recent months will need a new thesis to stop them from selling. I don’t see any signs for optimism.
2.The Nasdaq Composite will beat the Dow this week
Tech has been a big winner in recent years, so betting on tech over stodgy blue chips has been a good bet for me more often than not. I’m going to stick with this pick. Most of the names in the composite are just too cheap at this point. The market is ripe for the tech-stacked secondary stocks to continue to outpace the 30 megacaps that make up the Dow Jones Industrial Average.
3. Mattress Firm will beat Wall Street’s earnings estimates
Some stocks are just flat-out better than others.
When it comes to consumer electronics, CONN’S, Inc. (NASDAQ:CONN) is a small player making waves. The company has survived the digital media migration, largely because it’s not the physical media-intensive retailer that its larger rivals are. Conn’s specializes in big-ticket items that are easier to purchase in person without running up hefty fulfillment costs online.
Another thing it does is make analysts look like perpetual underachievers. If analysts say the company posted a profit of $0.56 a share in its latest quarter, I’ll whip out a “greater than” sign. History’s on my side!
One of my best tricks to beating the market is finding stocks that perpetually land ahead of the prognosticators. Let’s go over the past year of earnings reports.
| Quarter | EPS Estimate | EPS | Surprise |
|---|---|---|---|
| Q4 2011 | $0.29 | $0.34 | 17% |
| Q1 2012 | $0.33 | $0.35 | 6% |
| Q2 2012 | $0.35 | $0.36 | 3% |
| Q3 2012 | $0.28 | $0.38 | 36% |
Source: Thomson Reuters.
Things can change, of course. Consumers can stop buying refrigerators, mattresses, and riding mowers. Yes, Conn’s stocks furniture, bedding, and lawn-care equipment, and online retailers can do a better job of selling big-ticket items. However, it was generally a strong holiday quarter for consumer electronics. It’s hard to argue against the company until this trend reverses. Everything seems to be falling into place for another market-thumping quarter on the bottom line.
Three for the road
Well, there are three predictions right there. Let’s see how I fare this week.
The article 3 Predictions for Next Week originally appeared on Fool.com.
Longtime Fool contributor Rick Munarriz and The Motley Fool have no position in any of the stocks mentioned.
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